Thursday, May 30, 2019

Rig Counts Are Irrelevant; Producing More With Less -- May 30, 2019

Several years ago I started posting that rig counts were irrelevant for shale oil. Don't take that out of context. Rig counts provide information about level of activity but rig counts don't have the same importance in unconventional oil as in conventional oil. That's been obvious in the Bakken for years now.

Today at twitter:

Tough Day For Big Oil -- WTI Drops Almost 4% -- Trading Below $57; OPEC No Longer Relevant -- May 30, 2019

Relevancy of OPEC? This sort of shows how relevant OPEC has become. OPEC suggests they will keep production low to "maintain" prices; talk of war in the Mideast; tankers being targeted in the strait; and, drones hitting Saudi oil fields. Venezuela and Iran at minimal production/exports. Mexico not doing much better. Western Canada landlocked. Five years ago, all of this would have resulted in a spike in WTI -- today, WTI drops almost 4%.  Saudi is relevant; OPEC is not, but I've been saying that for years.

Active rigs:

Active Rigs6562502980

One new permit:
  • Operator: Slawson
  • Field: Big Bend (Mountrail)
  • Comments: Slawson has a Challenger Federal permit in section 29-151-92, Big Bend oil field
Three permits canceled:
  • Whiting: three Berg Trust permits, all in McKenzie County
Fourteen permits renewed:
  • Petro Harvester Operating Company, LLC (5): four PTL4 permits and one FLX3 permit, all in Burke County
  • CLR (4): two Dennis permits and two Flint Chips permits, all in Dunn County
  • QEP (3): three MHA permits, all in Dunn County
  • Texakota (2): two H. Borstad permits, both in Williams County
One producing well (a DUC) reported as completed:
  • 34485, F, XTO, Nelson Federal 21X-5F, Antelope-Sanish, t--; cum --; 

North Dakota Board To Hear Case On Extension Of Leases, Update #2 -- May 30, 2019

See this post for background (and at that post, another link to the original story). So this is the third post on this issue, the second update.

A reader writes that a lot of the "delay" is due to the BLM. This reader, a credible correspondent suggests:
About ½ of the land in the area, part of the old Figure “4” ranch, is Federal Minerals, controlled by the BLM.
About 2007, (12 yrs ago) some “official” said “we need a study,” which has never been done, supposed to have been funded in 2018.   All “bovine-droppings”!
Because of this, the BLM will not put the O&G Leases up for lease, sooooo that has tied the hands of all parties involved.    Sad!  That’s why there are so many un-Drilled Sections here.
"Bovine-droppings." The reader was being tactful.

If you go back and look at the graphics at the linked post above, look at how little has been drilled in this area (to which the reader alludes). This reader's note explains a lot. Folks over at oilprice and elsewhere talk about "stranded assets" due to climate change concerns decades from now. Something tells me the BLM and other regulatory agencies are a bigger nuisance / factor when it comes to "stranded assets" than climate change issues fifty years from now.


So many good scenes in this movie. Yes, I know I just posted this clip, but I "feel the need" to post it again. So many good lines. Such a great scene.

On another note:

My primary aircraft for many years in the USAF: the F-15D, a two-seater, for training and upgrades.

These are F-15C's - single-seat F-15s probably out of RAF Lakenheath, England.

Hearing Dockets For June, 2019

NDIC posts the hearing dockets here.

Dockets are tracked here.

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Note: the overlapping units are getting larger and larger; the units are often composed of smaller-than-full sections; it's difficult to abbreviate the description and/or visualize the overlapping unit; expect many typographical errors in the summary below; if this is important to you, go to the source.

Highlights In Bold
Mostly cases involving commingling and pooling.

No flaring cases.

Only one revoke/suspension case, if I recall correctly.

See more at this post regarding continuation case #27556.

Wednesday, June 26, 2019
Eight Pages

27582, Hess, Tioga-Lodgepole, redefine field limits, Burke, Williams, and Mountrail counties
27583, Hess, commingling, the GO-Dahl pad
27584, Hess, commingling, the GO-Hauge pad
27585, Hess, commingling, the CA-E Burdick pad
27586, Hess, commingling,  the RS-Harstad pad
27587, Hess, commingling, the AN-Bohmbach pad
27588, Hess, Tioga-Bakken and/or Pleasant Valley-Bakken; establish an overlapping 2560-acre unit; one well, Mountrail County
27589, Worthington Industries, to site an indirect heated separator closer than 125 fee to the oil tanks
27590, CLR, Avoca-Bakken,  to complete Rader 11-24H1, #34967, Williams County
27591, Sakakawea Ventures, LLC, construction of a treating plant, Williams County
27592, Kraken Operating, LLC, commingling, the Dragseth pad, Williams County
27593, MRO, pooling,
27594, MRO, pooling,
27595, MRO, pooling,
27596, MRO, pooling,
27597, MRO, pooling,
27598, MRO, pooling,
27599, MRO, pooling,
27600, MRO, pooling,
27601, MRO, pooling,
27602, MRO, commingling, the Rebecca/Zimmeman/Bugbee/Delmont/others
27603, MRO, commingling, the Rosa Benz/Higgins/Snider/Ruth/others
27604, MRO, commingling, the Carlson/Kinney/Blanche wells
27605, MRO, commingling, the Lily Reiss/Bryden/Herbert/Pletan wells
27606, MRO, commingling, the Charchenko/Parmeter/Raleigh/Reagan wells
27607, Hess, Tioga-Bakken, 4 wells on a standup 1280-acre unit; sections 30/31-157-94; Mountrail
27608, Hess, Alkali Creek-Bakken; 11 wells on a standup 1280-acre unit; sections 26/35-155-94, Mountrail County
27609, Hess, pooling,
27610, Hess Water Services, SWD,
27611, Hess Water Services, SWD,
27612, BR, Keene and/or Union Center-Bakken, 2 wells on a 2560-acre unit, 2/3/10/11-152-96, McKenzie
27613, BR, Keene-Bakken, 14 wells on a 1280-acre unit, sections 3/10-152-96, McKenzie County27614, BR, Hawkeye-Bakken, 14 wells on a 1280-acre unit, sections 4/9-152-95; McKenzie County
27615, BR, commingling, the Anderson Ranch pad, McKenzie County
27616, Oasis, SWD

Thursday, June 27, 2019 
Eleven Pages

27617, XTO, Alkali Creek-Bakken, establish two overlapping 2560-acre units, 11/12/13/14-154-95 and 12/13-154-95 and 7/18-154-94; one well, Mountrail, Williams
27618, XTO, Siverston-Bakken, estalbish an overlapping 1920-acre unit, 26/35-151-98 and 2-150-98, 4 wells; McKenzie;
27619, Kraken Oil & Gas, LLC, Sanish-Bakken, establish an overlapping 2560-acre unit, 14/15/22/23-154-92, Mountrail
27620, RimRock Oil & Gas Williston LLC, Mandaree-Bakken, establish an overlapping 1280-acre unit, 23/24-149-93, Dunn County
27621, RimRock, Moccasin Creek-Bakken, establish an overlapping 640-acre unit; E/2 of 34 and the W/2 of 35-148-93; one well, Dunn County
27622, Slawson, Big Bend-Bakken, establish an overlapping 1280-acre unit; 34/35-152-92; three wells, Mountrail
27623, Slawson, Big Bend-Bakken, establish an overlapping 640-acre unit, W/2 of 10/15-151-92; one well, Mountrail
27624, WPX, Squaw Creek-Bakken, establish an overlapping 3840-acre unit; one well; McKenzie County
27625, North Range Resources, LLC, Grassy Butte-Duperow Pool, establish a 640-acre unit, one well; McKenzie County
27626, New Horizon Resources, LLC; recompletion of the Harold Haugen 25-1 well (#6900) into the Gunton Formation (Red River) (see below) at a location approx 500 feet FSL and 2140 feet FWL of section 25-161-103, Divide County
27627, Newfield, South Tobacco Garden-Bakken, Schneiderman, #36298, set back rules, McKenzie
27628, NDIC, South Tobacco Garden-Bakken; appropriate spacing for future wells in section 17/20/29/32-150-99; McKenzie
27629, CLR, Beaver Lodge-Bakken, i) establish an overlapping 2560-acre unit; one well; ii) establish an overlapping 3840-acre unit; one well; Williams
27630, CLR, Haystack Butte-Bakken, estalbihs an overlapping 2560-acre unit, one well; Dunn County
27631, CLR, Larson-Bakken, establish i) two overlapping 1920-acre units; four wells each; ii) an overlapping 3840-acre unit, one well; Burke County
27632, Cobra Oil & Gas Corp, to approve the voluntary unitization, operation, and further development of the Flat Top Butte-Madison Unit Area, consisting of lands within McKenzie County
27633, Cobra Oil & Gas Corp, Pierre Creek Field, Madison formation, recomplete the Federal Rivet 6-6 well (#13796), approx 1980 feet FNL and 2540 feet FEL of section 6-146-102, McKenzie County; and to establish a 320-acre unit comprised of N/2 of section 6-146-102, McKenzie County;
27634, Enerplus, Mandaree-Bakken; suspend/revoke a permit issued to WPX, Mandaree Warrior, #36463, McKenzie
27635, XTO, pooling,
27636, XTO, pooling,
27637, XTO, pooling,
27638, XTO, pooling,
27639, XTO, pooling,
27640, EOG, pooling,
27641, WPX, pooling,
27642, North Range Resources, LLC, pooling,
27643, CLR, pooling,
27644, CLR, pooling,
27645, CLR, pooling,
27646, CLR, pooling,
27647, CLR, pooling,
27648, CLR, pooling,
27649, CLR, pooling,
27650, CLR, commingling, the Gordon Federal pad, Dunn County
27651, CLR, SWD
27652, Slawson, pooling,
27653, Equinor Energy LP, Avoca-Bakken, two wells on an existing overlapping 2560-acre unit; Williams County
27654, Kraken Oil & Gas, LLC, Sanish-Bakken; seven wells on an existing 1280-acre unit, sections 15/22-154-92;
27655, Resource Energy Can-Am LLC, Ambrose-Bakken, 5 wells on an existing 1280-acre unit, Divide County
27656, Ballantyne, Red Rock-Spearfish, re-work the Legacy etal Bernstein 13-7 well (#21887), in section 7-163-76; Bottineau County
27657, Tobacco Garden SWD, LLC, SWD,
27658, Zavanna, LLC, SWD,
27659, Dahl SWD, LLC, SWD,
27660, White Owl Energy Services, SWD,
27661, White Owl Energy Services, SWD

Note: the Gunton formation -- see #27626 above --
The Red River Formation is productive across most of western North Dakota. Most Red River Formation production has been found west of the Nesson anticline, in the deepest parts of the basin, and is associated with structural closures.
However, the best porosity is not always coincident with the structure's crest.
The Red River Formation is the second most important hydrocarbon producing horizon in North Dakota and produces hydrocarbons in many fields.
The Stony Mountain Formation conformably overlies the Red River Formation and is comprised of interbedded calcareous shales and argillaceous limestones. The Stony Mountain Formation is rarely productive, but where it is productive it is always associated with a Red River Formation structure.
Production usually comes from the Gunton Member which can have a well developed dolomite porosity. The Stonewall Formation is the uppermost formation in the Big Horn Group and conformably overlies the Stony Mountain Formation. Continuous sedimentation occurred across the Ordovician-Silurian boundary and dolomites and limestones, with thin anhydrite beds near the basin center, were deposited. The Stonewall Formation produces oil and gas from several zones, usually associated with a Red River structure.
"The Red River is the second most important ...." I assume this was written before the Bakken. Before the Bakken, I believe the Madison was the largest production formation in North Dakota followed by the Red River. In round numbers, at their peak the Madison and the Red River were each producing about 12 million bbls/year. The Bakken is currently producing around 364 million bbls crude oil/year.

Wow! I Can't Make This Stuff Up! -- May 30, 2019

Record IPs are tracked here.

A reader spotted this:
Not sure if you noticed the Hess well completed in Antelope field a few weeks ago. It's the largest IP I've noticed from Hess and maybe overall? It's 35093 AN-Bohmbach H-8. Oil IP was 10626 and gas 27577. Be interesting to see what the others look like when they report.
I completely missed that. I would not forget if I saw an IP of 10,626. If that is not a typo, that is incredible. It's the biggest IP ever reported in the North Dakota to the best of my knowledge. The Antelope-Sanish is an incredibly good field so the IP is probably correct.

The scout ticket, it came off confidential list March 5, 2019:

NDIC File No: 35093     API No: 33-053-08605-00-00     CTB No: 135093
Well Type: OG     Well Status: A     Status Date: 4/5/2019     Wellbore type: Horizontal
Location: SESW 22-153-94     Footages: 295 FSL 1707 FWL     Latitude: 48.053302     Longitude: -102.755819
Current Well Name: AN-BOHMBACH- 153-94-2734H-8
Elevation(s): 2182 KB   2156 GR   2156 GL     Total Depth: 20749     Field: ANTELOPE
Spud Date(s):  9/5/2018
Casing String(s):  9.625" 2025'   7" 11084'  
Completion Data
   Pool: SANISH     Perfs: 11132-20414     Comp: 4/5/2019     Status: F     Date: 4/7/2019     Spacing: 2SEC
Cumulative Production Data
   Pool: SANISH     Cum Oil: 68402     Cum MCF Gas: 0     Cum Water: 32773
Production Test Data
   IP Test Date: 4/7/2019     Pool: SANISH     IP Oil: 10626     IP MCF: 27577     IP Water: 5599
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The file report: 35 stages; 10 million lbs; middle Bakken, an IP of 10,626.
  • Neset
  • spud: November 25, 2018
  • cease drilling: December 2, 2018
  • middle Bakken
  • KOP: tripped out once, due to motor failure
  • at penetration of the middle Bakken, gas units were very low
  • it appears the lateral took only four days to complete
  • gas units averaged only 264 units; there was a maximum of 1,000 units reported
  • the wellbore was 100% inside the middle Bakken
CLR Bohmbach wells are tracked here, but I am not yet tracking the Hess Bohmbach wells. Looks like I need to start doing that.

The five Hess AN-Bohmbach wells on that pad:
  • 35091, SI/NC, ... H-10;
  • 35092, SI/NC, ... H-9;
  • 35093, 10626, Hess, AN-Bohmbach-153-94-2734H-8, Antelope-Sanish, t4/19; cum 68K after 24 days;
  • 35094, SI/NC, ... H-7; has produced 12,890 bbls in 10 days which extrapolates to 37,670 bbls in the first month;
  • 35095, SI/NC, ... H-6; has produced 25,890 bbls in 14 days which extrapolates to 55,479 bbls in the first month;
Neighboring wells (to the east):
  • 19723, off line since 1/19; t10/11; cum 410K 1/19;
  • 23287, off line since 1/19; t4/13; cum 163K 1/19; minimal production for four days in 4/19;
  • 23571, off line since 1/19; t4/13; cum 243K 1/19; minimal production for four days in 4/19;
  • 23572, never taken off line while #35093 was fracked; t5/13; cum 176K 3/19; no evidence of halo effect;
  • 23573, never taken off line while #35093 was fracked; t5/13; cum 299K 3/19; no evidence of halo effect;
Neighboring well (to the west):
  • 33249, 1,748, Hess, AN-Gudbranson-LW-153-94-2215H-1, Elm Tree, t10/17; cum 317K 3/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

North Dakota Board To Hear Case On Extension Of Leases, Update -- May 30, 2019

See this post for background. See more at this post.

There are two parts to this long note. Be sure to read the second part, which is perhaps even more interesting.

First part:

A reader writes me to provide some background to the case.

Apparently the case is being heard this morning and and decision should be made fairly soon.

The reader provided a lengthy back-story to this whole issue. I would like to print it in full, but I prefer not to become a target of any gun owner who might be offended.

Suffice it to say that the reader who knows the area under discussion very, very well, suggests that the problem is more likely to be related to "access" -- finding a road or easement into the area.

The reader agrees with me that "rough terrain" may not be the issue -- unless by "rough," MRO means the personality of some of the locals. Wow, you can take North Dakota out of the wild west (some consider North Dakota to be the midwest), but you can't take the wild west out of North Dakota.

[Another digression: somehow, Deadwood, SD, due south of Williston is definitely part of the Old West, but Williston is considered to be the Midwest by those who live in Montana.]

By the way, that reminds me of a story. A few years ago I was hired to take some photos of real estate in the Bakken area. On one particular Saturday morning I got very, very lost. I finally decided to ask for help, and proceeded down a long gravel road to a homestead; at the entrance of the long gravel road there was some sign saying it was private property and perhaps it would be best to seek help elsewhere. But I decided to chance it.

About a mile down the gravel road, on the south side of the river, I turned in toward the homestead, to be greeted by two barking dogs, the kind that look like they are not barking "welcome" but rather, "maybe, best, you stay in your car."

I was momentarily distracted until I heard gun shots. LOL.

An older gentleman (with ear/hearing protection) was pistol shooting at a target -- the target was between the gentleman and me. I'm glad to say that he must have been a good shot -- no bullet holes in the car (or me).

I must have talked to him; he must have been friendly; I must have gotten directions but I have no recollection of anything that happened after driving into the homestead.

Second part:
This is language from the agenda.  (I was going to pull up the ND Oil and Gas maps and haven't - may not get that done today)
The Commissioner and Department staff met with Marathon on January 22, 2019, and were made aware of concerns to obtain commercial production before expiration of the amended terms. The Commissioner and Department staff met with Marathon on January 25, 2019, and Marathon requested permission to explore the opportunity to place an off unit pad north of Enerplus’s well pad located on State surface
Department staff contacted Enerplus and requested a formal response to Marathon’s request to locate an off unit pad north of Enerplus’s well pad. 
In a letter dated February 12, 2019, Enerplus denied the request stating a violation of correlative rights and therefore opposed Marathon’s proposed pad location. On March 26, 2019, the Commissioner and Department staff met with Marathon to discuss concerns that commercial production would be obtained prior to the expiration of the amended terms. On April 4, 2019, the Commissioner received a formal request for extension from Marathon. The Commissioner responded on April 16, 2019, to Marathon’s request for an extension that the determination had been made that circumstances do not warrant extension of the leases per the Amendment of the Oil and Gas Lease dated May 4, 2018.
From the reader:
Here's part of a lengthy blurb from today's proposed agenda.  It goes on for many more paragraphs, but they just recap statute, so here's an excerpt of what I find relevant.
Marathon Oil Company Request for Lease Extension in Dunn County T148-R95W-16: All In May of 2013, Marathon Oil Company (Marathon) entered into four leases with the Board of University and School Lands (Board) (OG13-00342, OG13-00343, OG13-00344, and OG13- 00345). These leases cover 469.52 acres of Common Schools mineral tracts in T148N-R95W-16, Dunn County, North Dakota, and Marathon paid a total bonus to the Board of $3,850,064. Marathon states their total expenses to date are in excess of $4 million (bonus, surveys, archeological surveys, etc.). Marathon experienced extreme difficulties in developing these mineral tracts, including; complex stakeholders, environmental concerns, and rough terrain which have impeded timely development of the area. The North Dakota Department of Trust Lands (Department) has been working with Marathon since late 2015 in search of a viable solution to develop the section. On November 20, 2017, a formal request was directed to Commissioner Gaebe requesting a 365- day extension. On January 23, 2018, Commissioner Smith received another formal request for a 365-day extension.
Paydirt (pardon the pun)

So - that land is 2 to 3 miles north and 1 to 2 miles west of Lost Bridge.  (Lost Bridge is on Section 34).  That whole tract  is listed as State of ND Wildlife Management.  It's the western 469 + acres of Section 16. The remaining eastern slice is Ft Berthold Reservation.  (The eastern 18 sections of that township is FBIR, and the reservation boundry picks up about a quarter mile into each adjoining section north to south)

Once Highway 22 continues north of the river, it veers east about 2 miles.  So - any access from Hwy 22 is through the reservation.  The section immediately south of 16, Section 21, is USA land, but you can't get to that unless you go through the Reservation. 
This is the area we are discussing:

But look at that. There's already an existing MRO pad even closer than the Enerplus pad. I must be missing something or the whole story is not being told. 

The reader mentioned that "Lost Bridge" is in section 34:


EIA Weekly Petroleum Report; Unremarkable -- May 30, 2019

Link here. Pending; to be released at 10:00 a.m. CT.
  • US crude oil inventory change, weekly: (yesterday API reported a draw of almost 6 million bbls) -- the EIA reports that the weekly change was almost flat -- the change was a meaningless draw of 0.3 million bbls -- again, the false precision .... 0.3 million / 476.5 million = 0.000629 or 0.063%
  • US crude oil inventory, weekly: 476.5 million bbls; about 5% above the five-year average
  • Refinery operating capacity: finally, above 90% but not by much -- at 91.2%;
  • gasoline: inventories are about 1% above the 5-year average, having increased by 2.2 million bbls
  • distillate fuel inventories decreased by 1.6 million bbls and are about 5% below the 5-year average

Week Ending
Million Bbls Storage
Week 0
November 21, 2018
Week 1
November 28, 2018
Week 2
December 6, 2018
Week 3
December 12, 2018
Week 4
December 19, 2018
Week 5
December 28, 2018
Week 6
January 4, 2019
Week 7
January 9, 2019
Week 8
January 16, 2019
Week 9
January 24, 2019
Week 10
January 31, 2019
Week 11
February 6, 2019
Week 12
February 13, 2019
Week 13
February 21, 2019
Week 14
February 27, 2019
Week 15
March 6, 2019
Week 16
March 13, 2019
Week 17
March 20, 2019
Week 18
March 27, 2019
Week 19
April 3, 2019
Week 20
April 10, 2019
Week 21
April 17, 2019
Week 22
April 24, 2019
Week 23
May 1, 2019
Week 24
May 8, 2019
Week 25
May 15, 2019
Week 26
May 22, 2019
Week 27
May 30, 2019

Natural gas fill rate: from twitter, natural gas storage change, link here:
  • storage fill of 114 bcf from previous week
  • vs estimate of 98
  • previous 100

A sharper rise than last year but still a smooth climb.

Making America Great -- Pipeline Projects -- May 30, 2019

New link: pipeline projects. The other day I posted a partial list of pipeline projects. I was not aware of the "beta" release from some EIA folks with a more comprehensive list. The link is here. At that page, near the bottom is a link to "Pipeline Projects." By clicking on that link, one can download a PDF on the desktop. At the PDF you end up on the "Contents" page. Move over to the "Pipeline Projects" page and an entire pipeline list shows up, from calendar year 2010 to the present. The very last one, #206, is the TC Energy, Keystone XL Pipeline Project with no completion date provided.

Natural gas pipelines: link here. See first comment. 


This information has been previously posted in various formats. But I am absolutely impressed with all the pipeline that will be laid by the end of this year.

The first graph is the original from the EIA. It's a bit deceiving because "2019" looks like a bust. In fact, "2019" will be a huge year once the "completed" stuff is moved over to the graphic.

Once the "completed" stuff for 2019 is moved over to "2019" (assuming all is completed on schedule), it's going to turn out to be quite a year. I assume that the bar will grow a bit for "2021" before it's all over.